Mark Dubowitz in the Media

Senate Shows United Support for Blocking Iran Access to Euros

The Senate showed strong support over the weekend for blocking Iran's access to euros, as Congress continues to push for additional measures to choke funding to Tehran's nuclear program.

The Senate unanimously passed a non-binding amendment to the budget plan early on Saturday that seeks to stop Iran from using a loophole allowing it use the European Central Bank's interbank payment system to gain access to euros.

The amendment, sponsored by Illinois Republican Mark Kirk and West Virginia Democrat Joe Manchin, is symbolic, as the budget will not become law. It follows a letter signed last month and sent to the European Union by 36 senators, and could indicate the Senate would introduce legislation later on the issue.

Washington and the EU last year hit Iran with sanctions that slashed its crude exports by half. That led to inflation and pushed down the rial, Iran's currency. Still, Iran's government has access to vast foreign currency reserves, including supplies of euros, that senators say helps it stabilize the budget and circumvent the sanctions.

"Closing the euro loophole in our sanctions policy is critical in our efforts to prevent Iran from acquiring a nuclear weapons capability," Kirk said. "The U.S. Senate has spoken and now the European Union needs to act."

The EU office in Washington did not immediately comment.

Iran is enriching uranium to a concentration that countries in the West say can relatively easily be made suitable for nuclear weapons. Tehran says the program is for generating electricity and medical purposes.

There is no indication U.S. and EU sanctions are pressuring Iran's leaders to slow the program. Sellers of oil have found numerous ways around sanctions.

A proponent of sanctions on Iran said closing the euro loophole is a necessary step: Without a rapid plunge in Iran's accessible foreign exchange reserves, Tehran has resources to get beyond the point where the country achieves an undetectable nuclear bomb, said Mark Dubowitz, head of the Foundation for Defense of Democracies.

The amendment argues that the Iranian government maintains bank accounts around the world filled with foreign exchange reserves, the majority of which are held in euros.